Exxaro agrees new Medupi contract

Johannesburg - Coal producer Exxaro said on Wednesday it has finalised a revised supply agreement for Eskom's Medupi power station.

"Exxaro and Eskom signed a definitive agreement on March 26 2010," the coal miner said in a statement.

Exxaro and Eskom signed an initial agreement in September 2008.

In terms of this agreement, Exxaro would have supplied an average of 14.6 million tonnes per year of power station grade coal to Medupi, under construction near Lephalale, Limpopo, from a brownfields expansion project at Exxaro's Grootegeluk mine.

"At the time, Exxaro's capital expenditure for the Grootegeluk Medupi Expansion Project was estimated at R9bn and delivery of first coal was planned to commence in the fourth quarter of 2011 with a ramp-up to full production by 2014."

However, towards the end of 2009, Eskom requested Exxaro to review some terms of the agreement. This had resulted in Exxaro temporarily suspending its Grootegeluk Medupi Expansion Project funding programme as well as the placement of additional contracts associated with the Grootegeluk Medupi Expansion Project.

The review has now been finalised.

"In terms of the revised agreement, the delivery of first coal is planned for the second quarter of 2012 with a ramp-up to full production by 2015," Exxaro said.

This ramp-up was now in line with the commissioning and commercial operation date of the power station's first unit.

Exxaro said it would now resume its funding programme as well as the placement of additional contracts for the Grootegeluk Medupi Expansion Project.

"Exxaro will supply an average of 14.6 million tonnes per annum of power station grade coal to Eskom's new Medupi base-load power station for a period of 40 years," the company stated.

- Sapa